Kerala Wants Angels for Startups

A man worked on his laptop at the ‘Start-up Village’ in Kochi, Kerala, Oct. 13, 2012.

The angels are coming to “God’s Own Country,” and they’re looking to do business.

South India’s Kerala state — which has adopted the above slogan to draw tourists — is pushing ahead with a drive to support innovation and entrepreneurship.

After establishing a “Startup Village” to assist entrepreneurs with infrastructure, the state is now helping form an angel network to support the startups.

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The “Mallu Angel Network” will try to get successful Kerala-born entrepreneurs and industrialists from across the world, especially the oil-rich Gulf states, to offer mentoring services and funding support. “Mallu” is the colloquial term for Malayalam, the language spoken in Kerala.

“More important than the money is mentorship,” said S. Gopalakrishnan, one of the seven founding members of the Mallu Angel Network. Mr. Gopalakrishnan is a co-founder and executive co-chairman of Bangalore-based Infosys Ltd., one of India’s largest software companies.

The Mallu Angels hope to have 1,000 members within the next two years, with each having the ability to invest up to 10 million rupees ($183,000), said Shaffi Mather, economic adviser to the state’s chief minister.

The network itself is aiming to raise a startup capital of 10 million rupees from its members. It is also planning to leverage established startup financing networks such as the Mumbai Angel Network and the Indian Angel Network.

Angel networks usually refer to groups of successful entrepreneurs and executives who are interested in investing in early stage ventures with good growth potential.

“We are trying to transform the new generation culturally from job seekers to job creators,” said Mr. Mather.

The state government has already put in place a series of initiatives to build an ecosystem for innovation and entrepreneurship. For starters, it has offered the infrastructure to set up a startup village in the coastal city of Kochi, providing entrepreneurs with workspace, tech infrastructure and access to investors.

The government has also introduced a new policy that allows students to miss up to 20% of classes if they are working on entrepreneurial projects.

But funding remains a major concern.

According to research firm Venture Intelligence, nowhere in Kerala featured in the list of Indian cities that received startup financing in 2012. This is in sharp contrast to the $131 million brought in through 39 deals in neighboring Karnataka’s capital city of Bangalore.

One of the reasons for Kerala’s lack of startups is that the state has a large communist presence and influential trade unions, which have prompted successive governments to adopt socialist policies.

This has resulted in fewer entrepreneurial ventures being created and the best of technology minds and business talent emigrating in search better opportunities.

For its funding needs, Kerala, which produces more than 55,000 engineers a year, relies to a large extent on citizens who work overseas and send money home, especially from the Middle East.

“Have conferences, have startups from around the world come and get them to talk to students across colleges in Kerala, have entrepreneurship weeks every quarter, if you want it to be effective,” he said.

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